Back Door Roth
Thank you in advance…..
Husband and Wife both have traditional IRA’s that were commingled with deductible and non deductible contributions making them subject to the prorata rule when considering Roth conversion.
Rollover to company 401(K) not permitted.
Is the prorata rule side stepped or rendered obsolete if a new Traditional IRA account is opened and funded with a nondeductible contribution (income too high) and then converted to Roth IRA leaving the existing accounts with the commingling, untouched?
Thank you,
Robert D. Boyle, CPA
Permalink Submitted by Alan - IRA critic on Tue, 2020-04-21 18:56
No. Since all owned TIRA accounts are treated as combined for tax purposes, setting up separate accounts will not avoid the pro rate rules. Specifically, line 6 of Form 8606 must indicate the balance of all owned TIRA, SEP, and SIMPLE IRA accounts. Therefore, it makes no difference which account receives a contribution or which account is used to fund a conversion.